The Indiana State sentinel. [volume] (Indianapolis) 1868-1895, 1887-05-18
SOME OLD TIME BooMs.

No speculative insanity in this country,
and none in this age, has approached the
wild conditions and monstrous results of
the South Sea bubble" recently de-
scribed in the Sunday Sentinel, or the con-
temporaneous mississippi scheme" of
John Law, though the railway mania,
starting in the rascally but shrewd opera
tions of Hudson, the Railway King" in
England in the last generation, bore the
features of its family. No real estate
"boom," no mining fever, no oil
speculation, no stock or grain "corner"
has ever developed here anything more
than a remote resemblance to either of
these two great historical frauds. No other
Characterization fits them so well, and yet
neither was conceived or put in operation
with any dishonest intent. The South
Sea scheme" ran quite a career of honest
and profitable business before 1t was pros
tituted to rascally uses, and Laws legiti-
mate operations did we'll. He intended in
the outset to do only fair and legal bank
ing and trading business, and so far as he
changed he was forced to do it by the pres
sure of popular greed.
John Law was q Scotchman, born near
Edinburgh in 1911 of a family in high
position, and was given thorough educa-
ton, but proved a better gambler than
scholar. having killed an antagonist in a
duel he went to Holland and studied
finance in the great Amsterdam Bank, at
that time the richest and most extensive in
its operations in Europe. He returned to
Scotland and published book on banking
and the issue of bills based on prospective
State revenues, bat it met with no favor.
A renewal of the project in several cities OF
the Continent had no better luck, and he
applied himself to gambling with such sue
cess that on the death OF Louis XIV,
in Ills, he went to Paris with $500, 900
e, 100000 francs.) Here he found his
first opportunity to introduce his banking
project. The wars and the extravagant
building expenses of the "Grande Mon
argue" hadileft the kingdom seriously en-
barrassed, when the Regent-during the
minority of Louis XV.-the Duke of Or
leans, took charge of it. He was gambler
and aroue, gsy, gallant and interruptions
very much the same style of man as Law
and readily approved the establishment of
bank by the latter on his theory of busi-
ness. 1t was bank of issue as well as dis
count, and its bills were redeemable in spe.
Gle equal in value to the current coin of the
realm. 1t accepted Gov eminent bills at par
when they were worth but 80per cent, but
Government patronage enabled ii to cover
the difference and make money. Its stock
was readily taken, and its business -four
ished honestly and legitimately till Law
opened out his scheme for improving the
French territory on the Mississippi, COL
onizing it and monopolizing the trade
with it and the French West Indies.
The Mississippi Valley was believed,to be
inexhaustibly rich in all sorts of valuable
products of the soil and in deposits OF the
precious metals, and when Law obtained
the grant of exclusive trade with it, in
I'LL, his 100000 shares Of stock at 800
each were taken up promptly. In
1719 this Company of the West"
got the grant of the French
East India Company to the exclusive
trading of the East Indies, China and the
South Seas, and became the Company of
the Indies - The stock was increased to
GA, 900 shares at Sl10, and an engagement
made to lend the Government $500, 000, 900
at per cent. The stock rapidly ran up to
thirty-fve and forty times its par value.
A real estate ''boom" started in Paris, and
land rose to the enormous figure of 400
years purchase" manufactures increased
four-fold,' the population OF Paris was en-
laIged by tens of thousands of visitors
and temporary residents drawn thither
by the chances of speculation, Says
one author: "When Law. as Di-
rector General, promised an annual re-
turn of 200 livres on each share of 55C
livres, which paid in deprecated Govern.
ment paper was worth 120 livres, the pub
lie enthusiasm rose to absolute fir envy
Law house and the street in front OF it
were crowded with applicants of both sexes
and all ranks, who were content to wait fol
hours, nay, DAYS together, in order to OBJ
tain an interview with the modern Plu
tus." The outside population attracted BY
the speculation had to live in garrets
kitchens and stables. This was the culmi
! nation of the mania.
| A good many shrewd stakeholder
thought it wise to take the tide at thu
flood and sold out, investing their money
in England or Belgium. This depleted
the stock of specie in the country ant
the Governments issue notes had reaches
the enormous amount of 1,925, 000,0
livres. A smash came, Of course. In July
1870, almost simultaneous with the burst
ing of the "South Sea bubble in England
the great Mississippi scheme" broke dowr
in France. Law escaped the vengeance o
his victims by flight, but seems to hay
really had such faith in his own fnancia
fantasies that he saved very little, and LEI
Paris with only $4,000. While the Regen
lived-till 1723-he was paid pension
$4,000 year. After that he sank ost c
sight, became petty gambler and died i
Venice in 1929, nine years after his gres
crash. In a few days after the crash {
July the shares OF the company that ha
advanced from their face of $50 Hvres
% 600 liyres, were held at "a and "n